TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 1148
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....08 pertaining to SCL, prior to its merger with SFL. In addition, the demand also covered the period April 2009 to March 2010 in respect of the merged entity. 2. SCL prior to its merger was providing taxable services as well as exempted services. In respect of the taxable services, they availed cenvat credit in full, attributable exclusively to taxable services. By maintaining separate accounts, they did not avail the cenvat credit attributable exclusively to exempted services. In respect of the input services which were common to both taxable and exempted services, they availed these credits in full and claimed that these credits did not exceed 20% of the output service tax liability. As per the provision of Rule 6(3) (c) of the Cenvat Credit Rules, 2004 there was a restriction that the credit on common input services should not exceed 20% of the output service tax liability. This restriction was done away w.e.f. 01.04.2008 when Rule 6(3) was amended and Rule 6(3A) was included providing for reversal on proportionate basis. After issue of show cause notice dated 06.01.2011, the adjudicating authority passed the impugned order dated 17.11.2011 in which the entire cenvat credit avai....
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....acts on the part of the appellant as well as the order for payment of penalties. 5. The ld. DR justified the impugned order and opposed the arguments advanced on behalf of the appellant. He emphasized the following arguments. (a). For the period prior to 01.04.2008, the identical issue was raised by the department which was decided by the order in original dated 30.09.2009. At the time of the above proceedings, there was no merger of the SCL with SFL. It came to the notice of the department only after the said merger that SCL had adopted an identical modus operandi to that of SFL, during the concurrent period. These aspects have been elaborately discussed by the adjudicating authority in para 30 of the impugned order. (b) Hence he justified the allegation of suppression of fact and the invoking of the extended period of limitation. The present impugned order has followed the earlier order in original dated 30.09.2009 for taking the view that Rules 6(2) and 6(3) cannot operate concurrently. (c) Even after the amendment carried out w.e.f 01.04.2008 in Rule 6 (3), there is no material change in respect of the compliance aspect of manufacturer/ provider of output service with refer....
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....other notice cannot be issued invoking suppression of facts. In this regard, I find that the present notice, eventhough addressed to Sify Technologies, pertains to the wrongly availed excess credit by Sify Communications, which was earlier a separate entity and got merged with Sify Tech only w.e.f. 01.04.2008 and the consolidated returns for both the companies were filed only w.e.f 01.04.2009. The earlier notices had been issued only to Sify Technologies for wrong availment of Cenvat Credit on common input services when they had claimed to maintain separate set of accounts. The presence of similar situation as that of Sify Techonologies in Sify Communications, came to light only after enquiries were Caused by the Department officers, consequent to the merger of both Sify Tech and Sify Comm and filing of consolidated return. Thus, the facts regarding of maintenance of separate accounts were only known and the availment of common input services came to be known only after verification were made regarding Sify Comm and the details were called for. Hence, mere issue of notice to Sify Tech cannot be a reason to establish the awareness of department regarding the nature of maintenance of....
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....he provisions of that rule. (2) Where a manufacturer or provider of output service avails CENVAT credit in respect of any Inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable. (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer or the provider of output service, opting not to maintain separate accounts, shall follow either of the following conditions, as applicable to him, namely:- (a) ... ... ... ... (b) ... ... ... ... (c) the provider of output service shall utilize credit only to extent of an amount not ex....
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....about "manufacturer" or "provider of output services". The said sub-rules do not talk about the service wise maintenance of accounts. It is with reference to "manufacturer or "provider of output service". As already noted, sub-rule (1) absolutely prohibits availing CENVAT credit on input service which is used in the manufacture of exempted goods or exempted services except in the circumstances mentioned in sub-rule (2). In other words, it is very clear that plenary provision of sub-rule (1) is giving exception to a situation envisaged in sub-rule (2). Sub-rule (2) is for a 'manufacturer' or 'provider of output service' who shall maintain separate accounts for receipt, consumption and inventory of input and input services meant for use in the manufacture of dutiable final products or in providing output service as well as those exempted. A combined reading of provisions of Rule 6 makes it clear that CENVAT credit shall not be allowed for input services both for exempted as well as taxable output services, maintains separate accounts in respect of consumption of such input services on which credit is availed. 12. Sub-rule (3) of Rule 6 is another option available to the assessee wh....
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....st the basic principle of CCR. We are of the considered opinion that in respect of common input services for which the appellant is entitled to credit they have an option either to follow sub-rule (2) or sub-rule (3). Following both selectively in respect of selective common input services is against the basic principle and the legal bar under sub-rule (1). Accordingly, we hold that the original authority is correct in disallowing the credit which was availed by the appellant under sub-rule (3). 14. The appellants submitted that there is no provision to deny credit on common input services. While we agree on such legal principle, we note that credit cannot be availed beyond the scope of provision in Rule 6. In the appellant's case credits are availed in terms of provision under sub-rule (2) and sub-rule (3) simultaneously. Hence the question of irregularly availing and disputing the reversal due to lack of legal machinery is not tenable. In other words, the appellants should follow legal provision as per Rule 6. Having not followed, they cannot take a plea that there is no provision to deny credit already availed. When the appellants maintained separate accounts for common in....